Investment Management: Fair Dealing: 

Fiduciary Duties

 

Priority of Investor Interests

Position: Fund boards should recognize that the interests of investors should supersede those of the investment manager and those of the investment management firm.

Rationale: The role of the investment manager and the investment management firm is to act on behalf of and in the best interests of their clients. Investors have entrusted their financial assets in the hands of investment professionals. These professionals therefore owe a duty to these clients to seek the optimal execution strategy based on their due diligence of the customers’ goals, objectives, and risk constraints, and the execution venues which can accommodate these needs.

Where stated: EAC - FSA CP 176 Softing and Bundling 2003; USAC - SEC IC Governance

 

Institutional Investors’ Obligation to Vote Proxies

Position: Institutional investors have an obligation to participate in and vote on corporate decisions that affect the performance and long-term health of the investments of their clients, and to advocate improvements to corporate governance structures.

Rationale: Voting on corporate matters and advocating on behalf of corporate governance issues helps institutional investors protect the interests of their clients by working to improve the long-term health of the companies in which they invest.

Where stated: AIMR - NYSE Listing Stds

 

Pension Directors’ Loyalty

Position: Directors of corporate pensions have a duty of loyalty and a duty to act in the best interests of the beneficiaries of the pension plan.

Rationale: The beneficiaries of such plans have entrusted investment professionals with the assets that will provide for their retirement. As such, investment professionals should consider such beneficiaries their clients.

Where stated: USAC - SEC Insiders and Pension Blackouts